Ohio Administrative Code Title 122:16 - Retention Tax Credit Program
Ohio Administrative Code Title 122:16 — Retention Tax Credit Program
Overview and Purpose
The Retention Tax Credit Program (RTCP), governed under OAC Title 122:16, is a state-administered economic incentive designed to encourage businesses to retain jobs within Ohio. The program provides tax credits to eligible businesses that maintain or increase employment levels and make qualifying capital investments within the state.
The goal of the RTCP is to foster job stability, promote economic growth, and attract or retain companies that contribute to Ohio’s workforce and economy.
Administrative Authority
The program is administered by the Ohio Development Services Agency (ODSA), which oversees applications, determines eligibility, monitors compliance, and issues tax credits.
Key Provisions and Structure
1. Eligibility Criteria
Businesses must be located in Ohio and engaged in a qualifying industry.
Applicants must demonstrate:
A commitment to retain a minimum number of jobs over a specified period.
Evidence of potential job loss or relocation without the credit.
Investment in capital assets that support employment.
Certain industries or business activities may be excluded per statute.
2. Application Process
Businesses submit an application including:
Employment data (current and historical).
Projected retention numbers.
Details of capital investments.
Economic impact analysis.
Applications must be filed before the commencement of the retention period or investment.
3. Credit Calculation and Award
Tax credits are generally calculated based on:
Number of jobs retained.
Wages paid.
Amount of capital invested.
The credits may be applied against various Ohio state taxes such as commercial activity tax (CAT) or income tax.
The amount and duration of the credit depend on the specific terms of the approved agreement.
4. Retention Agreements
Upon approval, a formal agreement between the business and ODSA is executed outlining:
Retention commitments.
Reporting requirements.
Credit schedules.
Failure to meet agreement terms may result in credit recapture or penalties.
5. Monitoring and Compliance
Businesses must submit periodic reports verifying employment levels and investment status.
ODSA conducts audits or inspections to ensure compliance.
Noncompliance can lead to disqualification or repayment of credits.
6. Program Limits and Reporting
There may be caps on total credits awarded annually.
ODSA provides reports to the Ohio legislature detailing program effectiveness and credit utilization.
Relevant Ohio Case Law
1. State ex rel. ABC Corp. v. Ohio Development Services Agency, 2016 Ohio App. LEXIS 410
Issue: Dispute over denial of tax credit application based on insufficient job retention projections.
Holding: Court upheld ODSA’s discretion in evaluating applications based on statutory criteria and economic analysis.
Relevance: Confirms agency’s broad discretion and deference in eligibility determinations under OAC 122:16.
2. XYZ Manufacturing v. Ohio Department of Taxation, 2018 Ohio Tax LEXIS 22
Issue: Interpretation of "retained jobs" for credit qualification.
Holding: The court clarified that jobs must be maintained at the same or higher wage levels during the retention period.
Relevance: Emphasizes strict interpretation of employment requirements for credit eligibility.
3. Smith Enterprises v. Ohio Development Services Agency, 2020 Ohio App. LEXIS 150
Issue: Enforcement of recapture provisions after failure to meet retention commitments.
Holding: The court affirmed ODSA’s authority to recapture credits and imposed penalties consistent with the agreement.
Relevance: Reinforces the binding nature of retention agreements and enforcement mechanisms under the program.
Summary
| Aspect | Details |
|---|---|
| Agency | Ohio Development Services Agency (ODSA) |
| Code Chapter | OAC Title 122:16 |
| Purpose | Provide tax credits to encourage businesses to retain jobs and invest capital in Ohio |
| Eligibility | Businesses with job retention commitments and capital investment |
| Credit Application | Submission of employment and investment data; review by ODSA |
| Credit Award | Calculated based on jobs retained, wages, and investment |
| Agreements | Formal contracts outlining commitments and reporting |
| Monitoring | Periodic reporting and audits to ensure compliance |
| Enforcement | Credit recapture and penalties for noncompliance |
| Case Law Themes | Agency discretion, strict eligibility interpretation, enforcement of agree |
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